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Break Free of Your Core Banking ASP Model

OVERVIEW

In the face of new regulatory requirements, dynamic customer expectations and agile digital-based rivals, banks are finding that their application service provider (ASP) model as a core banking platform is becoming increasingly inflexible and restrictive. Being handcuffed to it is putting them at risk of becoming digitally irrelevant.

To compete, banks must strategically break free from the ASP model. Banks must transform core banking to be hyper-flexible, enabling them to change as quickly and often as needed to deliver the in-the-moment personalized advice and product information customers want at their fingertips. It is one way that banks can regain their core banking strength and ready themselves for the future.

"Digital-only banks inherently run with multi-speed IT and core open banking platforms as their Systems of Record."

RECOMMENDATIONS

The core banking ASP model at most banks is a single Frankenstein-like system of many stitched-together pieces, which is rigid, costly to maintain and slow to change.

Competitive, digital-ready core banking requires banks to evolve to a modern core IT architecture through two strategic actions:

1. Re-wire the IT delivery organization to support multiple business objectives, or “multi-speed IT.” It is about banks being flexible enough to deliver innovative changes without compromising speed or quality. Organizations coded to deliver at single speed are destined for failure.

2. “Hollow out the core” and diversify the providers of IT technology for greater flexibility and innovation. It means having traditional core banking platforms solely act as systems of record that securely hold information about customers’ transactions, history and status. Doing so enables IT teams to setup the scaffoldings for a modern plug-and-play architecture powered by newer, best-of-breed digital technology solutions.

"Some banks are evolving their ASP model to be multi-speed and to plug and play best-of-breed technology."

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